WASHINGTON, Nov 27 (Reuters) - U.S. farm income will drop by
3 percent this year, the result of surging production costs
aggravated by crop losses that stemmed from the worst drought in
half a century, the government said on Tuesday.

Even so, income would be close to the record high set in
2011, the Agriculture Department said. In a quarterly forecast,
it said production costs would rise by 8 percent this year,
outpacing a gain in crop and livestock income.

Feed costs are up 18 percent this year, the USDA said. Feed
would account for 40 percent of the overall increase in costs.

"Despite gains in almost all sources of farm income, larger
increases in farm expenditures, especially for purchased feed,
have more than wiped out those price-led gains to farm income,"
it said.
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